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This template document is provided for guidance purposes only. We recommend you obtain the help of a qualified lawyer to complete it. Use of this document is subject to the terms and conditions set out at www.simmondsstewart.com/templates.
© Simmonds Stewart Limited 2018 SEA V1.2
This is a set of employee share option plan
rules for use by tech start-ups based in
Southeast Asia wishing to grant options to
purchase ordinary shares in the company to
directors, employees or contractors.
The rules include a template letter of grant to
send to each employee, director or contractor
who is to be offered options in the company.
If the recipient wishes to accept the offer then
they must countersign and return the letter of
grant to the company within 21 days. The
company only issues the option certificate to
the option holder once it has received the
countersigned letter of grant (the form of that
certificate is also set out in these rules).
The company needs to take tax and
accounting advice in respect of options before
adopting any form of share option scheme.
Share option schemes are simple to set up
but are not the most effective share scheme
from a tax perspective. The taxation
treatment will of course vary depending on
applicable law but, very often, the holder of
the options is taxed on the difference between
the exercise price and the market value of a
share in the company on the date an option is
exercised.
These rules would ideally be used in
conjunction with a shareholders’ agreement
and constitution that adequately deal with
small minority shareholdings, including pre-
emptive rights on share transfers.
applicable law
This document is intended for use by
companies domiciled in Southeast Asia.
Because the laws in each Southeast Asian
country are different, you may need to have
the document reviewed by a local lawyer. We
have suggested (as a placeholder) that the
document be subject to Singapore law as this
is the most common domicile of tech
companies raising capital in Southeast Asia,
and Singapore is well respected as a
jurisdiction.
Subject to local company law, the
implementation of a share option scheme will
usually require the passing of directors’ and
shareholders’ resolutions approving the
scheme, the grant of the options and any
issue of the underlying shares on any
exercise of the options.
using this template
The User Notes and the statements in the
footer below (all marked in red) are included
to assist in the preparation of this document.
They are for reference only – you should
delete all user notes and the statements in the
footer from the final form of your document.
The use of [square brackets] around black
text means that:
▲ the requested details need to be
inserted
▲ there are different options for you to
consider within a clause
▲ the whole clause is optional and you
need to consider whether to include it,
based on the company’s circumstances
and the user notes.
Before finalising your document, check for all
square brackets to ensure you have
considered the relevant option and ensure
that all square brackets have been deleted.
If you delete any clauses or schedules,
remember to cross reference check the
document.
User notes
Template employee share option plan (ESOP)
Confidential
This template document is provided for guidance purposes only. We recommend you obtain the help of a qualified lawyer to complete it. Use of this document is subject to the terms and conditions set out at www.simmondsstewart.com/templates.
© Simmonds Stewart Limited 2018 SEA V1.2
1
RULES OF THE EMPLOYEE SHARE OPTION PLAN
OF [COMPANY NAME]
1 INTERPRETATION
1.1 In these Rules, unless the context otherwise requires, the following words and
expressions have the following meanings:
Definition Meaning
Board the board of directors of the Company from time to time, or
a duly appointed ESOP committee of that board.
Business Day Monday to Friday, other than any public holiday that
occurs in [Singapore].
Cause [User note: The below are examples of what may
constitute “Cause”. The company may want to narrow
or broaden the circumstances as appropriate.]
termination on grounds of misconduct or any other conduct
that is inconsistent with the fulfilment of the express or
implied terms of the Option Holder's service to the
Company. Those grounds include, but are not limited to,
the Option Holder:
▲ committing a material breach of the Option Holder’s
employment, contractor or services agreement with
the Company;
▲ intentionally failing to perform any of the Option
Holder’s duties to the Company;
▲ committing a material breach of the Rules;
▲ taking any action that materially and adversely
affects the Company;
▲ refusing to comply with the reasonable directives of
the Option Holder’s manager(s) or any of the
Company's policies and procedures;
▲ committing gross negligence in the performance of
the Option Holder's duties;
Confidential
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© Simmonds Stewart Limited 2018 SEA V1.2
2
▲ committing wilful dishonesty, fraud, or misconduct
with respect to the business or affairs of the
Company;
▲ being convicted of any criminal offence which may
result in a term of imprisonment or which involves
dishonesty;
▲ breaching any obligations of confidentiality or non-
competition owed to the Company; or
▲ breaching any duty to act in good faith towards the
Company.
Constitution the constitution or articles of association (as applicable) of
the Company, as amended or replaced.
Company [insert], a company incorporated in [insert] whose
registered office is at [insert].
Employee Share
Option Plan or ESOP
the Company’s employee share option plan, consisting of
these Rules and each Letter of Grant.
Exercise Price [User note: The Exercise Price is the price per share
that the option holder will pay when the options are
exercised. This is very often the market price of a
share at the date of grant of the option (i.e. the date of
the relevant Letter of Grant). It depends on the
country of domicile but very often the option holder
will be liable for tax when he or she exercises or sells
the option on the difference between the Exercise
Price and the market price of the shares at the time the
option is exercised.]
the price payable for an Option Share upon the exercise of
a Vested Option, as stated in the relevant Letter of Grant.
Expiry Date [User note: This is the final date on which an option
holder can exercise his or her options. Consider what
is appropriate for your company – consider the likely
time frame for a liquidity event v/s the period during
which you are comfortable having options
outstanding. Typically this might be between 5-8
years from the date of grant.]
Confidential
This template document is provided for guidance purposes only. We recommend you obtain the help of a qualified lawyer to complete it. Use of this document is subject to the terms and conditions set out at www.simmondsstewart.com/templates.
© Simmonds Stewart Limited 2018 SEA V1.2
3
the date that is [insert] years following the date of the
relevant Letter of Grant.
Letter of Grant a letter from the Company to an Option Holder setting out
the number of Options granted to an Option Holder and the
Exercise Price in respect of those Options.
Option an option granted to an Option Holder in accordance with a
Letter of Grant, each being a right to subscribe for one
Ordinary Share.
Option Holder an employee, director or contractor of the Company to
whom Options have been granted under the ESOP.
Option Share an Ordinary Share issued on the exercise of an Option.
Ordinary Share an ordinary share in the share capital of the Company, the
rights of which are set out in the Shareholders’ Agreement
and the Constitution.
Rules these rules, including the Schedules attached to them.
Shareholders'
Agreement
[User note: It is most likely that at the point at which a
ESOP is implemented the company will already have a
shareholders’ agreement in place and these Rules
assume that this is the case.]
the shareholders’ agreement between the Company and
the shareholders of the Company dated [insert], as
amended.
Shares all shares in the share capital of the Company, including
any Option Shares.
Vest the right to exercise an Option which arises on the vesting
date of that Option in accordance with these Rules and the
relevant Letter of Grant, and Vested and Unvested have
corresponding meanings.
Vesting Schedule the vesting schedule attached as the Appendix to the
Letter of Grant.
Confidential
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© Simmonds Stewart Limited 2018 SEA V1.2
4
1.2 Interpretation:
a A reference to:
i a Rule or a Schedule is to a Rule in or a Schedule to these Rules;
ii a person includes bodies corporate, unincorporated associations or
partnerships;
iii including and similar words do not imply any limitation;
iv a statute includes references to that statute as amended or replaced from
time to time; and
v $ or dollars is to [Singapore] currency.
b The headings in these Rules are for convenience only and have no legal effect.
c The singular includes the plural and vice versa.
d If there is any conflict of meaning between the main body of these Rules and a
Schedule, the main body of these Rules prevails, unless expressly stated
otherwise in the Schedule.
2 ADMINISTRATION OF THE ESOP
[User note: Some companies administer their ESOP through a board appointed
committee which may only include certain directors. ESOP Rules can therefore
sometimes set out the constitution of this committee. This document assumes
that the full board of directors will make decisions on the administration of the
plan, but the directors are entitled to subsequently set up a committee if they
wish.]
2.1 Administration by the Board: The ESOP is to be implemented and administered by
the Board. The Board is to determine all questions of interpretation concerning a Letter
of Grant or these Rules, and any determination made by the Board is final and binding
upon all persons having an interest in the ESOP.
2.2 Offers of Options: Subject to Rule 4 and applicable law, the Board may offer Options
to any employee, director or contractor of the Company in accordance with the terms of
the ESOP. Each offer is to be made by way of a Letter of Grant in substantially the
form set out in Schedule 1 (or as amended by agreement of the Board).
2.3 Option register: The Company must maintain a register setting out all current Option
Holders and the number of Vested Options held by each Option Holder.
Confidential
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© Simmonds Stewart Limited 2018 SEA V1.2
5
3 AMENDMENTS TO THE RULES
The Board may vary these Rules at any time for the purpose of implementing or
administering the ESOP. The Board may do all acts and things, enter into any
transactions, agreements, deeds, documents or arrangements, make any rules or
regulations or impose any terms and conditions as the Board, in its sole discretion,
considers to be necessary or desirable to give full effect to the ESOP.
4 SIZE OF THE ESOP
[User note: This is the maximum number of options that can be allocated under
the ESOP without amending the terms of the ESOP or adopting a new share
option plan.]
4.1 ESOP pool: Subject to Rule 4.2, the maximum number of Options which may be
issued in accordance with the ESOP is [insert].
4.2 Adjustments to ESOP pool: If an Option is cancelled, lapses, or is otherwise
terminated, or if an Option Share is cancelled, an additional Option may be issued in
accordance with Rule 2.2.
5 VESTING AND EXERCISE OF OPTIONS
5.1 Vesting of Options: The Options granted to an Option Holder under a Letter of Grant
will Vest progressively in accordance with the Vesting Schedule. Subject to Rule 8, the
Option Holder may exercise an Option that has Vested at any time during the period
commencing on the date on which the Option Vested and ending on the Expiry Date.
5.2 Expiry: Any Option that is not exercised on or prior to the Expiry Date lapses on the
Expiry Date.
5.3 Exercise by written notice: An Option that has Vested may be exercised by the
relevant Option Holder:
a providing at least 10 Business Days’ written notice to the Board in substantially
the form set out in Schedule 2;
b paying to the Company the Exercise Price in cleared funds in respect of each of
the Options being exercised on or before the date set out in the notice provided
to the Company in accordance with Rule 5.3a, in cleared funds and into the
nominated bank account of the Company; and
c providing any other documentation which the Board may require in its sole
discretion.
Confidential
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© Simmonds Stewart Limited 2018 SEA V1.2
6
5.4 Issue of Option Shares: Following an Option Holder's exercise of Vested Options in
accordance with the ESOP, the corresponding number of Option Shares in the
Company must be issued to the Option Holder.
5.5 Failure to pay: If an Option Holder fails to pay the Exercise Price in accordance with
Rule 5.3b then, unless otherwise determined by the Board, the Option Holder’s
entitlement to those Options lapses, even if the Expiry Date of those Options has not
passed.
5.6 Compliance with laws: A Vested Option may not be exercised by an Option Holder if,
in the opinion of the Board, the issuance of Option Shares to that Option Holder would
constitute a violation of any applicable law or would be in violation or breach of any
provision of the ESOP. As a condition to the exercise of a Vested Option, the Board
may require an Option Holder to provide evidence that the issue of Option Shares to
that Option Holder would be in compliance with all applicable laws and the terms of the
ESOP.
5.7 Deed of accession: As a condition to the issue of any Option Shares, the relevant
Option Holder will (if it is not already a party) be required to execute a deed of
accession to the Shareholders’ Agreement (in a form acceptable to the Board in all
respects).
5.8 No distribution: By holding Options, an Option Holder does not have the rights of a
shareholder in the Company and is not, except as provided in Rules 6 and 7, entitled to
participate in any distribution nor any issue of Shares or other securities in or in respect
of the Company other than the Ordinary Shares to be issued upon the exercise of
Options in accordance with the ESOP.
5.9 No transfer: Options are personal to the relevant Option Holder and are not
transferable without the approval of the Board, which approval may be withheld in the
Board’s absolute discretion.
6 ADJUSTMENTS
6.1 Bonus issue, consolidation or subdivision: If there is any bonus issue,
consolidation or subdivision of any Shares or any reduction or cancellation of the share
capital of the Company (or any similar reorganisation of the capital of the Company),
the number of Options, the Exercise Price, or both may be adjusted by the Board to
ensure that the economic effect of the Options remains the same.
6.2 Notice: Following any adjustment made pursuant to Rule 6.1, the Company must
notify the Option Holders in writing and deliver to them a statement setting out the
adjusted number of Options and Exercise Price. Any adjustment will take effect from
the date that the statement is delivered to an Option Holder.
Confidential
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7
6.3 Restructure: If there is a restructure of the Company, its share structure or its
business (including the establishment of a new holding company in [User note: The
following should be amended depending on the jurisdiction where the Company
is registered] [Singapore] or overseas for the purpose of procuring investment), the
Board may cancel the Options and procure the issue of new options in the Company, a
new holding company or any other entity if the Board acting in good faith considers that
the economic effect of those new options remains substantially similar to the existing
Options.
7 TERMS OF ISSUE OF OPTION SHARES
An Option Share issued as a consequence of the exercise of an Option will rank for
dividends from the date it is issued and will otherwise rank equally in all respects with
the other Ordinary Shares of the Company then in issue. It is acknowledged by the
Option Holders that the Company may have issued or may in the future issue any other
class of Shares ranking in any or all respects in priority to the Ordinary Shares.
8 CANCELLATION OF OPTIONS
8.1 Good leaver: If an Option Holder ceases to be an employee, director or contractor of
the Company for any reason other than Cause:
a all Options that have not Vested as at the date that the Option Holder ceases to
be an employee, director or contractor of the Company (Good Leaver Date) will
be cancelled without compensation on that date; and
b all Options that have Vested as at the Good Leaver Date must be exercised
during such period as will be determined by the Board in its sole discretion at the
relevant time, and any Options not exercised within that period will lapse, unless
the Board determines otherwise.
8.2 Bad leaver: If an Option Holder ceases to be an employee, director or contractor of
the Company for Cause:
a all Options (Vested or otherwise) will be cancelled without compensation on the
date that the Option Holder ceases to be an employee, director or contractor of
the Company (Bad Leaver Date); and
b the Company will have the option to purchase some or all of the Option Shares
held by the Option Holder at the Exercise Price paid by the Option Holder for
those Option Shares (Call Option).
8.3 Exercise of the Call Option: The Company may exercise the Call Option by notice in
writing to the Option Holder at any time during the period from the Bad Leaver Date to
Confidential
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© Simmonds Stewart Limited 2018 SEA V1.2
8
the date that is 12 months following the Bad Leaver Date, specifying the number of
Option Shares that the Company wishes to purchase (Call Exercise Notice).
8.4 Purchase price: The purchase price for each of the Option Shares that is the subject
of a Call Exercise Notice will be the Exercise Price.
8.5 Settlement: The date of settlement of any transfer of Option Shares undertaken in
accordance with this Rule 8 will be the date that is one month from the date of the Call
Exercise Notice, or an earlier date notified to the Option Holder in writing by the
Company at least 5 Business Days in advance (Settlement Date). On the Settlement
Date:
a the Option Holder must sign any documents or resolutions and do any other
thing as may be necessary to transfer the number of Option Shares specified in
the Call Exercise Notice from the Option Holder to the Company; and
b the Company must pay to the Option Holder the total purchase price for the
number of Option Shares specified in the Call Exercise Notice.
9 EARLY VESTING OF OPTIONS
9.1 Options Vest on a liquidity event: If:
a the Company enters into a listing agreement with [User note: The following
may need to be amended depending on the jurisdiction where the
Company is registered] [Singapore Exchange Securities Trading Limited], or
other national stock exchange of similar or better standing;
b one or more shareholders of the Company enter into a binding agreement with a
third party (or a group of associated third parties) on arms’ length terms under
which the third party is to acquire 50% or more of the voting Shares of the
Company, and that agreement becomes unconditional;
c the Company enters into a binding agreement to dispose of assets comprising
more than half the value of the Company’s assets and that agreement becomes
unconditional; or
d the Company resolves to amalgamate with any other company (whether or not it
is the continuing company), in a transaction that is in substance the same as
those in b and c above,
(each a Liquidity Event),
[User note: The rule below provides that 100% of unvested options automatically
vest on completion of a Liquidity Event. Some companies prefer to specify a
Confidential
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© Simmonds Stewart Limited 2018 SEA V1.2
9
lower percentage if it expects that an acquirer may want at least part of the
unvested options to continue to vest post-acquisition as a means of incentivising
the acquired employees. If you would like to provide that less than 100% of
unvested options vest on the Liquidity Event, you should take advice on the
drafting. Practically, it is unlikely that the existing plan will be continued in its
current form following the Liquidity Event and therefore option holders will
receive the benefit of an equivalent incentive scheme, for example in the
acquiring company.]
then unless otherwise directed by the Board, 100% of the Unvested Options will
immediately Vest to the extent that they have not done so at the date of the Liquidity
Event, and all of the Vested Options may be exercised on or before the date of
completion of the relevant transaction triggering the Liquidity Event (Completion). Any
Vested Options not exercised by that date automatically lapse.
9.2 Options may be cash settled: If there is a Liquidity Event, the Company may cash
settle some or all of the Options by paying an Option Holder the difference between the
value of an Ordinary Share as determined by the Liquidity Event and the Exercise Price
for each Option being cash settled. If an Option is cash settled, the Option
automatically lapses.
10 TRANSFER OF OPTION SHARES
10.1 Restriction on transfer: No Option Shares may be sold, transferred or otherwise
disposed of by an Option Holder unless the Option Holder has provided the Board with
a written notice setting out:
a the number of Option Shares that the Option Holder wishes to transfer;
b the price per Option Share to be paid by the intended purchaser; and
c the identity of the intended purchaser,
and the Board has approved that sale, transfer or other disposal in writing, which
approval may be withheld in the Board’s absolute discretion.
10.2 Other restrictions on transfer: Any sale, transfer or other disposal of Option Shares
by an Option Holder in accordance with Rule 10.1 will be subject to any restrictions or
limitations on the transfer of Shares set out in the Shareholders’ Agreement or the
Constitution.
10.3 Stamp duty: Any stamp duty (or similar) payable in connection with a sale, transfer or
other disposal of any Option Shares in accordance with Rule 10.1 will be met by the
transferring Option Holder.
Confidential
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10
10.4 Void transfers: Any purported sale, transfer or other disposal of any Option Shares by
an Option Holder other than in accordance with this Rule 10 is void and of no force or
effect, and the purported transferee or transferees will have no rights in the Option
Shares purported to have been transferred.
11 DRAG-ALONG RIGHTS
[User note: There may separately be drag-along rights set out in the company’s
shareholders’ agreement which would be binding. If so, it may be necessary to
expressly provide that the drag-along rights in that shareholders’ agreement will
prevail.]
11.1 If one or more shareholders of the Company (Seller) give written notice to the Board
that they wish, in one transaction or a series of linked transactions, to transfer more
than 75% of the Shares in the Company (Sale Shares) to any other person or persons
(Third Party) then the Company will require, by written notice (Drag-Along Notice),
that all of the Option Holders transfer to the Third Party all of their Option Shares in
accordance with Rule 11.2 (Drag-Along Option).
11.2 If the Company exercises the Drag-Along Option:
a each of the Option Holders will be bound to sell their Option Shares to the Third
Party at the price per Share to be paid by the Third Party to the Seller in respect
of the Seller’s Shares and otherwise on the same terms applicable to that sale;
b the Drag-Along Notice constitutes each director of the Company severally as the
agent of each Option Holder with full power and authority to do all things
necessary to transfer all of the Option Shares in accordance with this Rule 11;
c the Drag-Along Notice and all obligations arising from it will lapse if for any
reason the Seller does not, prior to or simultaneously with the transfer of the
Option Shares, transfer all of its Shares to the Third Party; and
d completion of the sale of the Option Shares will take place on the date of
completion of the sale of the Seller’s Shares.
12 TAXES
12.1 Option Holder indemnity: Each Option Holder indemnifies the Company against any
taxes (including income tax), stamp duty, levies or penalties which the Company may
be liable to deduct, withhold or pay by reason of an Option Holder being issued Options
or being issued Option Shares upon the exercise of any Options.
12.2 Authorisation to withhold: Each Option Holder authorises the Company to withhold
from payroll and any other amounts payable to the Option Holder by the Company, any
Confidential
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11
sums required to satisfy any tax obligations, whether of the Company or of the Option
Holder, which arise in connection with the Options, including any obligations arising as
a result of:
a the issue of Options to the Option Holder;
b any exercise of Vested Options by the Option Holder; and/or
c any issue of Option Shares to the Option Holder.
13 NO GUARANTEED EMPLOYMENT OR ENGAGEMENT
13.1 Terms of employment or engagement: The terms of employment or engagement of
an Option Holder with the Company are not affected by the Option Holder’s
participation in the ESOP. These Rules and the Letter of Grant do not form any part of
such terms of employment or engagement and an Option Holder is not entitled to take
any participation in the ESOP into account when calculating any compensation or
damages on the termination of his or her employment or engagement for any reason.
13.2 No guarantee of employment or engagement: An Option Holder’s participation in
the ESOP does not constitute an express or implied agreement of continued
employment or engagement of an Option Holder with the Company, during the period
in which the Options Vest or for any other period. An Option Holder’s participation in
the ESOP does not affect the Company's right to suspend or terminate an Option
Holder's employment or engagement with the Company.
14 MISCELLANEOUS
14.1 Confidentiality: Each Option Holder must keep these Rules and the relevant Letter of
Grant, their terms and any information it receives about the Company and its business
in connection with these Rules or the relevant Letter of Grant (Confidential
Information) confidential, and must not use or disclose that Confidential Information
without the prior written consent of the Company except to the extent that:
a disclosure is required by law;
b the relevant information is already in the public domain; or
c it is reasonably required in connection with any proposed:
i financing of that party;
ii sale of that party’s interest in the Company; or
iii sale of all or part of the business of, or the shares in, that party,
Confidential
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and the party receiving the Confidential Information has entered into
confidentiality undertakings substantially the same as those set out in this Rule.
14.2 Notices: All notices and communications given under these Rules must be in writing
and will be delivered personally, sent by post or sent by email to the address or email
address notified by an Option Holder or the Company from time to time. Any notice
given under these Rules will be deemed to be validly given:
a in the case of delivery, when received;
b in the case of posting, on the second day following the date of posting; or
c if emailed, one hour after the email is sent unless a return mail is received by the
sender within that one hour period stating that the addressee’s email address is
wrong or that the message cannot be delivered,
provided that any notice received after 5pm on a Business Day or on any day that is
not a Business Day will be deemed to have been received on the next Business Day.
14.3 Entire agreement: These Rules and the relevant Letter of Grant contain all of the
terms, representations and warranties made between the Company and each Option
Holder relating to the matters dealt with in these Rules and the Letter of Grant, and
supersede and cancel all prior discussions and agreements covering the subject matter
of these Rules and the Letter of Grant. Each Option Holder has not relied on any
representation, warranty or agreement relating to the subject matter of these Rules and
the Letter of Grant that is not expressly set out in these Rules and the Letter of Grant,
and no such representation, warranty or agreement has any effect from the date of the
Letter of Grant.
14.4 Further assurances: The Company and each Option Holder must each sign all
further documents, pass all resolutions and do all further things as may be necessary
or desirable to give effect to the ESOP.
14.5 Waiver: No exercise or failure to exercise or delay in exercising any right or remedy
will constitute a waiver by the Company or any Option Holder of that or any other right
or remedy available to it.
14.6 Partial invalidity: If any provision of these Rules or a Letter of Grant becomes invalid
or unenforceable to any extent, the remainder of these Rules and the Letter of Grant
and their application will not be affected, and will remain enforceable to the greatest
extent permitted by law.
Confidential
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© Simmonds Stewart Limited 2018 SEA V1.2
13
15 GOVERNING LAW
The terms and conditions of these Rules and each Letter of Grant, and any non-
contractual obligations arising from or in connection with the Rules and each Letter of
Grant, will be governed by, and interpreted in accordance with, the laws of [Singapore].
[User note: The paragraphs below provide that disputes that are not settled will
be referred to the Singapore International Arbitration Centre (SIAC). SIAC is seen
as a leading venue for the holding of commercial arbitration and is used by
companies across Southeast Asia.]
16 [DISPUTE RESOLUTION
16.1 Dispute: If any dispute, controversy or claim (Dispute) arises out of or relating to
these Rules or any Letter of Grant, or to the interpretation, breach, termination or
validity of these Rules or any Letter of Grant, the parties to the Dispute (Disputing
Parties) must use their best efforts to resolve the Dispute through consultation or
mediation. The consultation or mediation between the Disputing Parties must begin as
soon as practicable after one Disputing Party has delivered to the other Disputing Party
or Parties a written notice setting out the matter of the Dispute (Dispute Notice).
16.2 Arbitration: If a Dispute is not settled under Rule 16.1 within 30 days after the date of
the relevant Dispute Notice, the Dispute must be referred to and resolved by arbitration
in Singapore in accordance with the Rules of the Singapore International Arbitration
Centre (SIAC Rules and SIAC respectively). The tribunal will consist of one arbitrator,
to be appointed by the President of the SIAC. The language of the arbitration will be
English.
16.3 SIAC Rules: The SIAC Rules are deemed to be incorporated by reference in this Rule
16. However, to the extent that the SIAC Rules are in conflict with the provisions of this
Rule 16, the provisions of this Rule 16 will prevail.]
Confidential
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© Simmonds Stewart Limited 2018 SEA V1.2
14
SCHEDULE 1
Letter of Grant
[Insert date]
[Insert recipient’s name]
[Insert recipient’s address]
Dear [insert]
Offer of share options
We value your ongoing contribution as an [employee/director/contractor] of [insert company
name] (Company), and in connection with that role the Company wishes to grant to you
options to purchase shares in the Company (Options).
Number of Options
The Company offers you, on the terms set out in this Letter of Grant and the enclosed Rules
of the Employee Share Option Plan of the Company (Rules), the following Options:
Number of Options Exercise price per share
[Number of Options]* $[Exercise price]*
*As may be adjusted by the terms of the Rules.
The Options are granted to you for an aggregate consideration of $1.00 (receipt of which is
acknowledged).
Description of the employee share option plan
The terms of issue of the Options are set out in the Rules, but in broad terms:
▲ the Options will vest over time in accordance with the Vesting Schedule attached to this
Letter of Grant;
▲ subject to the Rules, the Options will be exercisable between the date an Option vests
and the date that is [insert] years from the date of this Letter of Grant;
▲ if you cease to be employed or engaged by the Company for Cause (as defined in the
Rules), all of your vested and unvested Options will be cancelled and the Company will
Confidential
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© Simmonds Stewart Limited 2018 SEA V1.2
15
be entitled to repurchase any shares issued to you on the exercise of any of the
Options at the exercise price; and
▲ if you cease to be employed or engaged by the Company for any reason other than for
Cause, any Options that have not vested at the date you cease to be employed or
engaged will be cancelled immediately and all Options that have vested will need to be
exercised by you within the period of time set out in the Rules or they will lapse.
The shares issued following the exercise of the Options will be ordinary shares in the
Company and will be subject to the provisions of the shareholders’ agreement relating to the
Company and to the Company’s constitution. When you exercise the Options you will be
required to execute a deed of accession to the shareholders’ agreement before any shares
will be issued to you.
We suggest that you obtain independent legal and financial advice to ensure that you
understand the implications of the Options and their potential effect on you, including the
financial and taxation implications of the Options. In particular:
▲ the Options do not give you the rights attaching to shares in the Company (these are
available to shareholders only, i.e. you will only have these rights if the Options are
exercised and shares are issued to you); and
▲ any benefits you get under the Options may be subject to tax, for which you will be
liable.
The Options are not a part of any employment or services contract and the issue and exercise
of the Options will be governed by the terms set out in this Letter of Grant and the Rules.
What you will need to do
Please contact the Company if you wish to discuss any aspect of this Letter of Grant or the
Rules. If you agree to the Company granting you the Options on the terms set out in this
Letter of Grant and the Rules, please sign a copy of the acceptance form (on the following
page) and return it to me before the date that is 21 days from the date of this Letter of Grant.
Following receipt of your executed acceptance form, the Company will provide you with an
option certificate recording the grant of the Options to you, in the form set out in Schedule 3 to
the Rules.
Yours sincerely
[insert name]
[insert title]
Confidential
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© Simmonds Stewart Limited 2018 SEA V1.2
16
ACCEPTANCE
Having read this Letter of Grant and the Rules, I accept the grant of the Options on the terms set out
in this Letter of Grant and the Rules and I agree to be bound by this Letter of Grant and the Rules.
I further irrevocably appoint each director from time to time of the Company severally as my attorney
(Attorney) only to the extent necessary to satisfy my obligations under and to give effect to this Letter
of Grant and the Rules. For those purposes, each Attorney may:
a complete any blanks in any document;
b execute any document in any form as the Attorney thinks fit;
c amend or vary any document as the Attorney thinks fit, and execute any document which
effects or evidences that amendment or variation;
d do anything which in the Attorney’s opinion is necessary, expedient or incidental to, or in any
way relates to this Letter of Grant, the Rules or any document referred to in a, b or c above or
any transaction contemplated by this Letter of Grant, the Rules or any document referred to in
a, b or c above;
e do any thing which I am obligated to do under the terms of this Letter of Grant or the Rules; and
f do any thing which in the Attorney’s opinion is necessary, expedient or desirable to give effect
to the provisions of this Letter of Grant or the Rules.
I acknowledge that each Attorney may exercise the powers of an Attorney under this letter even if the
Attorney benefits from the exercise of that power and I undertake to ratify and confirm any act of an
Attorney in exercise of the powers of attorney set out in this Letter of Grant.
SIGNED AND DELIVERED AS A DEED by
[INSERT NAME OF OPTION HOLDER]
in the presence of:
)
)
)
Signature of Witness
[Insert name of Option Holder]
Name of Witness
Occupation of Witness
Address of Witness
Confidential
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© Simmonds Stewart Limited 2018 SEA V1.2
17
APPENDIX TO LETTER OF GRANT
Vesting Schedule
[User note: Vesting schedules vary for each company, but in Southeast Asia the
period is often 4 years with a one year ‘cliff’. This means that after 12 months, 25% of
the options immediately vest with the remaining 75% progressively vesting on a
monthly or quarterly basis over the following 3 years.]
1. [25]% of the Options will vest on the date that is [one] year following the date of the
Letter of Grant; and
2. [75]% of the Options will vest during the period from the date that is one year
following the date of the Letter of Grant to the date that is [four] years following the
date of the Letter of Grant in equal [monthly/quarterly] amounts.
Confidential
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© Simmonds Stewart Limited 2018 SEA V1.2
18
SCHEDULE 2
Exercise Notice
[Insert date]
The Board of Directors
[insert name of company]
[Insert address of Company]
Dear Board
Exercise of Options
I refer to the options granted to me by [insert name of company] (Company) in accordance
with the Letter of Grant between the Company and me dated [insert date] and the Rules of
the Employee Share Option Plan of the Company (Options).
I give notice that I am exercising [insert number] Options on [insert date] at the exercise price
of $[insert] per share. On or before [insert date] I will deposit $[insert] in cleared funds into
the nominated bank account of the Company, being the total exercise price for the shares.
I agree to accept the shares subject to the current constitution and shareholders’ agreement
of the Company.
Yours sincerely
[Insert name of Option Holder]
Address:
Date:
Confidential
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© Simmonds Stewart Limited 2018 SEA V1.2
19
SCHEDULE 3
Option Certificate
THIS IS A CERTIFICATE OF SHARE OPTIONS GRANTED BY [INSERT COMPANY
NAME] UNDER THE EMPLOYEE SHARE OPTION PLAN
Name: Date of grant:
Designation: Number of options:
Exercise price: $ [insert price] per option Exercise period: As set out in the Rules of
the Employee Share Option Plan of [INSERT
COMPANY NAME] (Company)
Vesting Schedule:
The options will vest as follows:
1. [25]% of the Options will vest on the date that is [one] year following the date of the
offer letter sent in respect of the options (Letter of Grant); and
2. [75]% of the Options will vest during the period from the date that is one year
following the date of the Letter of Grant to the date that is [four] years following the
date of the Letter of Grant in equal monthly amounts.
The grant of the options is subject to the terms set out in the Letter of Grant and the Rules of
the Employee Share Option Plan enclosed with the Letter of Grant.
For and on behalf of [insert company name]
[insert name]
Director
Date:
OPTION CERTIFICATE